Swift Haulage Bhd, newly launched green logistic services’ outlook reassuring as it have attracted strong interest from certain European customers with strong ESG awareness, Kenanga Research said.
“Its green logistics services are available in areas of international freight, container haulage, inland distribution, forwarding and warehousing. So far, Unilever Malaysia has taken up one of Swift’s first two electric prime movers.
“It hopes to fully recoup additional costs incurred in relation to its green initiatives with the rising utilisation of its fleet and warehouses,” Kenanga said in its Company Update note today (Nov 10).
As such, the research house maintains its forecasts and OUTPERFORM call, and TP of 63 sen based on an unchanged FY24F PER of 10 times, in-line with local logistics sector benchmark, with no adjustment to its TP based on 3-star ESG rating.
Other takeaways from Swift’s 3QFY23 results briefing, is that Swift echoed WPRTS’s guidance for a container volume growth range of 5% to 10% for FY23. It also maintains a single-digit growth for FY24, following global recession (similar Westports Holdings Bhd), Kenanga noted.
“As Swift depends more on gateway cargoes compared with transshipment cargoes of WPRTS, it has stronger earnings visibility as Malaysian exporters benefit from a weak ringgit. We are keeping volume growth assumptions of 7% annually in FY23 -24F for its container haulage segment.”
Kenanga also noted that Swift reiterated its guidance for improved margins ahead to recoup additional cost for its green initiatives.
This is assuming the overall occupancy rate of its warehouses is to exceed 80% by 4QFY23 versus the current 72% and full utilisation of its upgraded fleet by 1QFY24.
“Its warehouse occupancy rate is relatively unchanged from three months ago with its Port Klang Free Zone (PKFZ) warehouse (178k sq ft) being only 30% filled, which should gradually rise to 45% before the year-end with the on-boarding of two new customers.
“On a more positive note, its Tebrau warehouses (200k sq ft) onboarded a new FMCG customer in Oct 2023, boosting its occupancy rate to
70% (from 60%).
“It hopes to lease the remaining 30% to Singapore-based businesses as their distribution hubs given the warehouse’s proximity to Tuas Second Link,” Kenanga added.
Meanwhile, it said that Swift is in final talks with a distributor of white goods to take up 70% space in its new warehouse in Westport (260k sq ft; completion by 1QCY24).
Swift, it added is still expansion mode, and has completed expansion of warehouse in Tebrau, Seberang Prai, PKFZ and Sabah as well as commenced warehouse management and transportation services in Pengerang for Petronas.
“Its on-going expansion include Westport on-dock depot, Mak Mandin warehouse, Westport warehouse in Pulau Indah and the biggest green logistics hub in Asia (outside China) under 42.5%-associate GVL, where the first phase of 2.8m sq ft will be completed by May 2025, 6m sq ft when fully completed by 2028.
“We like Swift for its leading position in the Malaysia haulage market commanding close to 10% share, its value-adding integrated offerings and its tremendous growth potential of its warehousing business,” the research house said.
The risks to Kenanga’s call include sustained high fuel cost, global recession hurting the demand for transportation service, and delays in its primary warehousing expansion plan.
